The Clearsale Blog

Rafael Lourenco shows luxury merchants how they can fight fraud

Rafael Lourenco shows luxury merchants how they can fight fraud

Retailers who sell luxury products face unique, high-stakes challenges in combatting CNP fraud. Celebrities, influencers, and other well-to-do shoppers want the best jewelry, handbags, and designer clothing — and so do fraudsters. Combine expensive products, customers who expect flawless service, and determined thieves, and you face a real test of CNP fraud prevention. Here’s how upscale retailers can protect their revenues and their relationships with legitimate customers.

Why fraud prevention is such a challenge for luxury retailers

To understand the complexities of fraud prevention in this sector, we first need to look at the fraud landscape. Fraudsters target luxury goods because they’re popular and easy to resell. Designer items like jewelry, leather goods, and handbags are small and easy to ship, and their high retail prices send bargain hunters searching for discount deals, even from dubious outlets. Not only do CNP thefts cost luxury retailers revenue, they also fuel competition that undercuts their prices.

Luxury retailers have fewer chances than mass-market retailers do to get fraud screening right. That’s because high-end merchants typically process fewer transactions at higher ticket values than mass-market sellers do. After all, how many people will buy a $5,000 handbag in a given month? That means that every transaction matters. Even one chargeback can represent a significant revenue loss and a skewed chargeback ratio.

On the other hand, the low number of transactions means premium retailers can’t risk alienating legitimate customers with too-stringent or off-target fraud rules. False declines can dramatically damage luxury sellers in two ways. The first, of course, is lost sales. Losing a $10,000 necklace sale is bad enough. Losing that customer’s business for the next decade or two is worse, and many well-heeled customers who are mistakenly declined never shop with that retailer again. False declines can cause reputational damage, too. Celebrities and social media influencers expect excellent customer service and they let their followers know when they feel mistreated by a retailer.

Best practices for luxury-goods fraud prevention and customer service

Because the expectations for customer service are so high among luxury-goods shoppers, retailers must make every aspect of fraud screening match those expectations. [Click here to continue reading].

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